Michael McDonell, center, walks across the floor of the New York Stock Exchange on Thursday, as stocks buckled under the weight of bad financialnews. The Dow Jones traded below the 10,000 mark for the first time in three months.

The U.S. Department of Labor is expected to release revised job counts showing the nation lost 824,000 more jobs than initially estimated during the deepest part of the recession.

The bad news was among several disappointing items that contributed to a steep drop in U.S. stock markets Thursday.

The S&P 500 lost 3.1 percent to close at 1,063.11, the Dow Jones industrial average fell 2.6 percent to close at 10,002.18, and the Nasdaq composite index fell almost 3 percent to close at 2,125.43.

The job revisions, which will be released today with the Labor Department’s January unemployment report, cover the 12 months from April 2008 through March 2009, a period that included the collapse of Lehman Brothers, Wachovia and Washington Mutual and the government takeover of AIG and Fannie Mae.

Those revisions, done each year, are usually small, within 0.1 or 0.2 percent of the total. But the latest revisions will be the largest since 1991, Bloomberg News reported.

“It’s an enormous understatement of the severity of the crisis,” Heidi Shierholz, a labor economist with the Economic Policy Institute, a union-supported think tank, told CNNMoney.com. “It confirms that things were actually worse on the ground than what the reports suggested.”

Labor statisticians use a model that calculates the number of businesses that start and close each year. The assumption is that in most years, the two balance each other out.

But more businesses failed and fewer started than the model predicted, overstating the number of jobs created versus what employers actually reported.

The revisions could mean that the economy lost closer to 8 million jobs rather than the 7 million initially thought since the recession started in December 2007.

That would put U.S. labor markets in a much deeper hole to dig themselves out of before consumers will feel like a recovery is underway and be willing to start spending more freely.

That model’s errors have also raised concerns that job counts since last April might prove on the high side.

State payroll counts will go through a similar revision in March. That could result in job losses in Colorado last year, now estimated at 86,600, moving closer to 100,000.

Aldo Svaldi has worked at The Denver Post since 2000. His coverage areas have included residential real estate, economic development and the Colorado economy. He's also worked for Financial Times Energy, the Denver Business Journal and Arab News.

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